If there was any doubt about a cryptocurrency boom, we need look no further than the explosion of growth of some companies in the space.
Such a company is BlockFiwho today announced the closing of a massive $350 million Series D financing that values it at $3 billion. While this news in itself is certainly eye-catching, it’s even more impressive when you consider that the startup just raised a $50 million Series C last August at a valuation of $450 million. The latest funding brings its total equity capital raised since inception to approximately $450 million, with the company raising $100 million in its seed and Series C rounds.
Zac Prince — who comes from a background in consumer finance — founded BlockFi with Flori Marquez in 2017. The Jersey City, New Jersey-based startup raised $1.6 million in a round of seed funding that closed in 2018 and was led by ConsenSys Ventures and included participation from SoFi.
Prince describes BlockFi as a financial services company for crypto market investors that offers a suite of products aimed at individuals and institutions. On the retail side of its platform, people can use its mobile app to earn a return on their crypto holdings (6% on Bitcoin, 8.6% on stablecoins), buy and sell crypto and get low-cost loans secured by the value of their crypto portfolio “so they can get cash without selling,” he said. Specifically, customers can buy and sell digital assets (from Bitcoin, Ethereum, and Link to Litecoin, PaxG, and several stablecoins) directly on BlockFi.
The startup is also a lender and provider of trade execution services to institutions participating in digital asset markets.
It’s a model that seems to work wonderfully. Since the end of 2019, BlockFi has seen its customer base grow from 10,000 to over 225,000. Today, BlockFi has 265,000 individual customers financed and more than 200 institutional customers.
And it has lent more than $10 billion to its retail, corporate and institutional clients.
Over the past year, BlockFi has also accomplished the following:
- Increased the number of assets on its platform to $15 billion, from $1 billion last March — with a loss rate of 0% on its entire loan portfolio since its inception.
- Increased monthly revenue to over $50 million from $1.5 million the previous year.
- Has increased its workforce to around 530 people, up from 100 last March.
“In less than six months since we completed our Series C, Bitcoin and other digital assets have assumed a central role in many investors’ portfolios and in broader financial markets,” Prince said. “Our belief that digital assets are the future of finance has been vindicated by our customer base, which grew 10x year-over-year in 2020 and more than doubled since the end of 2020.”
New investor Bain Capital Ventures, partners of DST Global, Pomp Investments and Tiger Global co-led the Series D, which included participation from a slew of other companies, including existing backer Valar Ventures, Breyer Capital , Susquehanna government products, Jump Capital and Paradigm, among many others. BlockFi employees who have been employed for more than a year have the option to receive cash on a portion of their equity through a secondary tender offer as part of the funding round.
BlockFi believes that investor enthusiasm for the Series D round reflects both the strong growth of the company’s business, as well as a “broader belief in cryptocurrencies as an asset class.”
“Individual investors, institutional asset managers and corporate treasury departments are all exploring avenues for investing in cryptocurrencies,” the company said.
“Our goal for BlockFi has always been to make cryptocurrency more mainstream — and every day provides more evidence that that’s exactly what’s happening,” said Marquez, who serves as the company’s senior vice president of operations. .
Bain Capital Ventures partner Stefan Cohen agrees. He believes there are currently limited banking services available to crypto holders, which puts BlockFi in a welcome position.
“Bitcoin has already eclipsed $1 trillion in market capitalization and is likely climbing to fulfill its promise of value. As wealth accumulates for BTC holders, most will be looking for ways to earn yield or borrow against their holdings for more traditional asset purchases such as homes, cars, and education,” he wrote via email. “BlockFi is the single leader in simple, secure, daily intake financial services to cryptocurrency holders.
The startup’s exponential growth over the past year proves “there was clearly a huge need for BlockFi’s services,” Cohen said.
“Their vision was to create a reliable and easy-to-use platform to bring cryptocurrency to the mainstream, and they really succeeded,” he added.
Meanwhile, Cohen said Bain Capital has a long-term thesis that Bitcoin is becoming a store of value and has actively invested in “pick and shovel businesses” that enable what is now one more market. of $1 trillion.
“Trusted financial services are a key pillar of the space, and we see them as a highly strategic component of the market,” he added.
Looking ahead, the startup plans to launch in the second quarter a Bitcoin Rewards credit card, which will give BlockFi customers the opportunity to earn Bitcoin cash on every transaction. It plans to use the new capital to continue to expand its product line, expand into new global markets and for strategic acquisitions. The company also plans to double its workforce by the end of the year, according to Prince.
BlockFi already has a global presence and retail customers in over 100 countries. Last year, it opened offices serving institutional clients in London and Singapore. This year, the startup is looking to add regional support in Europe, APAC, and LatAm for its retail customers.
Over the past week, BlockFi has been making headlines for other reasons. The company was a victim of one “unusual aggression” on March 7, when an attacker spammed the platform with fake signups and abusive language.
To this end, the company acknowledges learning that an unauthorized third party began attempting bulk sign-ups on its platform on March 7.
“We do not know the origin of the email addresses used for these ‘signups’ but they are not from us and they have been not emails from BlockFi customers,” the company told TechCrunch. “In general, we would classify the event as vulgar spam and the total number of valid emails affected was less than 1,000.”
The company maintains that no BlockFi data was accessed and its data was not compromised.
“Our customers’ funds and data were protected throughout the incident,” the company added. “Since then, our engineering and security teams have taken steps to prevent such occurrences from happening in the future. Additionally, we have contacted all valid email recipients directly to apologize for the ‘incident.
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